We study risk decisions all the way from the brain to markets, integrating knowledge from decision and game theory with neurobiology, economics and finance, psychology and computer science.

Most of our research is focused on various types of risk, from uncertainty emerging in our natural environment, strategic uncertainty (not knowing what one’s opponent in a social interaction is going to do), to uncertainty generated by large-scale social institutions, in particular, financial markets.

Our investigations are based on controlled experiments. Historically, many major scientific breakthroughs were the result of controlled experimentation as opposed to theoretical deliberations. In Scott Aaronson’s words: “More often than not, the only reason we need experiments is that we’re not smart enough.”

Within the academic field of finance, controlled experimentation is quite unique. We maintain that it provides much-needed scientific foundation to the field, otherwise we are “likely to go completely astray into imaginary conjecture” (Hannes Alfven, Nobel Laureate in Physics).

For research at the market level, this means that we had to develop our own online markets software, Flex-E-Markets, which allows us to create real-world financial markets in the laboratory ‘on the fly’.

We would also argue that, because of scarcity of experimental investigations, policy and regulation in finance is too much model-based and too little evidence-based. We think that we should learn more from experiments, as Richard Feynman (Nobel Prize Physics) said: “What I cannot create I do not understand.”

In studying human choice under uncertainty, we start from biology, and as such, depart from the purely behavioral approach that has become the norm for (financial) economics, and to a lesser extent, cognitive psychology, for at least one half century. We propose that evolution has shaped the neurobiology of decision-making processes, in ways though that may not be best suited to the risks that humans encounter in the twenty-first century.

Our ambition is to contribute to addressing major societal challenges such as the retirement savings shortfall, pathological gambling or financial markets instability, through fundamental research on decision-making.

We have a sister lab at The University of Melbourne, the Decision Neuroscience Lab, which focuses on the neuroscience of decision-making and development of methods. Our other sister lab at the University of Utah, ULEEF, run by Elena Asparouhova, focuses on markets – populated with humans and/or robots (algorithmic traders).